Big Oil Knows Jack

One drop of oil changed everything. Call it Before and After Jack. That’s because in summer 2006, oil giant Chevron announced it had successfully completed the so-called Jack 2 test well in the Walker Ridge Block in the Gulf of Mexico — at more than 7,000 feet of water depth and another 20,000 feet below the seabed. Do the math — that totals more than five miles down.

When the switch was thrown on Jack 2 — which reached a total depth of 28,175 feet — the well sustained a flow rate of more than 6,000 barrels of crude oil per day. “Now, we are really rethinking what is possible,” says Gary Luquette, president of Chevron North America Exploration and Production in Houston.

Meaningful production from Jack 2 may be five to seven years away, but that’s not really the point. “Jack is setting new standards for us,” says Luquette, who adds that scientists had plenty of worries, fears, and doubts before the switch was thrown. Sure, drilling at even 20,000 feet has become more common in the Gulf of Mexico. But Jack 2 ratcheted up the unknown, and no one could definitively say that new-generation petroleum exploration technology could withstand the immense pressures and the huge distances involved in tapping into reservoirs five miles down.

Those doubts are now being erased. “A revolution is occurring,” says Iraj Ershaghi, a professor of petroleum engineering at the University of Southern California. “Companies are drilling much further offshore, they are drilling in deeper depths, and it is technology that is allowing it.”

“The technology has gotten amazing,” agrees Peter Clark, an engineering professor at the University of Alabama. “Drillers tell me they can hit a one-square-foot target from 6,000 feet above,” he relates. If you can imagine putting a basketball through the hoop from a mile away, you are beginning to grasp the outlandish magnitude of what petroleum explorers accomplish today.

Ten years ago, perhaps one hole in 10 resulted in a productive petroleum strike. But these days — when one deepwater exploratory hole in the Gulf of Mexico might cost $150 million — companies are getting better results. “We are enjoying success rates nearer to 60 percent,” says Bill Coates, president of Schlumberger Oilfield Services North America, a Houston-based company.

But it gets better. The advanced technologies — 3-D seismic imaging, computer graphics, and more — that are now deployed to make drilling more precise are also winning new recruits for the industry, just as many companies are facing massive employee shortfalls triggered by waves of retiring baby boomers. A generational shift is in the works, but the companies say they are ready. “We are definitely looking to bring in more recent graduates because of the looming retirement wave,” says John Johnson, global exploration and production recruitment manager at BP.

“We are facing a huge demographic shift that will give young people extraordinary responsibilities early in their careers,” adds Brent Smolik, president of El Paso Exploration and Production Company in Houston. “That is a real recruiting plus.”

But for all the opportunity available to aspiring young oil executives, the technology itself may be the biggest lure for new recruits. “Young people are realizing how cool this technology is,” says Bill Keach, currently Halliburton Visiting Professor at Brigham Young University and a professor at the Energy and Geoscience Institute at the University of Utah in Salt Lake City. One odd observation Keach shares: if you can play the Madden NFL video game, you may have just the right skills to pursue deepwater oil exploration. Gamers, Keach says, come into his lab where 3-D projections of deepwater reservoirs are blown up on computer monitors for minute inspection, and instantly, “they know how to manipulate the images, how to explore them. They come in already comfortable with a lot of what we are doing.”

In some cases, the operation is controlled from someplace utterly unexpected. BP’s Kristen Ray, an operations engineer in her mid-20s, knows exactly what is occurring at the mammoth Na Kika petroleum platform, which produces around 110,000 barrels of oil and more than 400 million cubic feet of natural gas daily. What’s amazing is that Na Kika (named after an octopus god once worshiped by residents of the Gilbert Islands) is 140 miles offshore, but Ray sits in an office tower in Houston. Therein lies another tale about the technologies that are transforming today’s petroleum industry. “What they can do on the platform, we can do onshore,” says Ray, who worked for two years on Na Kika before transferring to dry land, where the capabilities at her fingertips include troubleshooting production difficulties.

Even a decade ago, offshore oil and gas platforms were connected — tenuously — to land by microwave communications systems. But storms, or sometimes just thick fog, could knock out all contact. Then BP got a big idea. What if it deployed state-of-the-art satellite technologies to link offshore platforms into what the company calls an Advanced Collaborative Environment (ACE) that lets land-based operators see video feeds, listen to audio, and monitor streams of operating data?

Sound expensive? BP says it is actually saving money with ACE, which now links eight Gulf of Mexico platforms to Houston. Steve Fortune, BP’s Gulf of Mexico information manager, gives an example of the cost savings. Pre-ACE, when a problem afflicted a platform, typically that entailed flying out an expert. Three to five days might have elapsed before anything was done. Of course, sometimes there were problems making experts available for such a prolonged period. “Now, this usually can be handled with a few hours spent in the ACE,” says Fortune.

At her station, Ray is surrounded by computer monitors, and audible alarms ring when something isn’t right. When she worked on Na Kika, Ray says she was right there when trouble arose. Now she isn’t, and initially she fretted that she would miss that immediacy. But, she says, “when there’s a problem I can just reach out, and within minutes we bring in all the experts into this room. When I was on Na Kika, I’d be trying to get people on the phone!”

Better still: Before, when a big storm took aim at a Gulf of Mexico platform, industry practice was to shut down production and evacuate the crew, just to be safe. Sometimes, the storm shifted course, so the shutdown was unnecessary. Soon, BP will be able to evacuate the crew but shift operating control to Houston, and production will cease until the storm is no longer a threat. With onshore preparation for restart conducted in the ACE, BP says, production can resume up to three days sooner than without ACE.

BP is using ACE technology to fuel even bigger dreams. Imagine a well malfunction off the coast of Angola or Nigeria that stretches the local problem-solving capabilities to the bursting point. Just a few years ago, that was a prescription for big trouble, and the standard response was to round up experts and get them to the spot where the trouble erupted. And how many days would that take?

Now imagine the world’s best production troubleshooters going online and instantly having access to real-time data from the wellhead. What that means is that top talent could be called on to solve problems anywhere. “We believe that in the future we will be able to do something along this line,” BP’s Fortune says. “We are also working on a ‘follow the sun’ strategy, where we will have perhaps three remote command centers in London, Houston, and Asia. Technology is letting us solve problems from thousands of miles away.”

At Schlumberger, drilling platforms in the Gulf of Mexico are linked via dedicated satellites to an Operational Support Center in Lafayette, La., where engineers access real-time data that lets them monitor drilling activity, inch by inch. “Technology definitely is letting us do much more, with fewer people, than anybody thought possible a generation ago,” says Schlumberger’s Coates.

Stretching what’s possible. That just may be the overriding theme of the petroleum business today. Back in Chevron’s Houston headquarters, Gary Luquette has one last big thought he wants to leave you with: This is an industry that is challenging every boundary. A generation ago, most wells were within sight of land. Now, researchers are looking at the outrageous possibility of drilling in the middle of the ocean, perhaps thousands of miles from the nearest shore. Is there enough oil there to make the work economically realistic? Is the technology on hand? Nobody really knows. “We are now doing things people believed couldn’t be done,” says Luquette. “We don’t know what we cannot do, not anymore. So much seems within our reach today.”

— Robert McGarvey

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Photographs coutesy of Chevron